EX-AFG CEO Hand Plotted to Kill Witness, Prosecutor Says

Oct. 6 (Bloomberg) -- A man convicted for his role in a
fraudulent $100 million mortgage scheme, former AFG Financial
Group Inc. chief executive officer Aaron Hand, was charged with
plotting to kill a witness who testified against him.

Hand, 39, sentenced in 2010 to as long as 25 years in
prison, today was arraigned in New York State Supreme Court in
Manhattan on two counts of attempted murder in the first degree,
one count of attempted murder in the second degree and one count
of conspiracy to commit murder. He faces four and half years to
life in prison if convicted.

“The motive for this attempted murder was revenge, plain
and simple,” Manhattan District Attorney Cyrus R. Vance Jr.
said in a statement.

Hand pleaded not guilty, and his lawyer, Kevin Canfield,
said his client was entrapped by the police.

Hand was the mastermind of a mortgage scheme that defrauded
Bank of America Corp., Wells Fargo & Co. and other banks,
according to Vance’s office, which said it won convictions
against all 27 people charged.

In August, an investigator with the district attorney’s
office received a tip that Hand, while incarcerated at New York
State Coxsackie Correctional Facility, was attempting to arrange
the murder of a witness who testified against him during a nine-week trial in July 2010, according to the statement.

Explicit Detail

Based on this evidence, an undercover investigator from the
district attorney’s office was sent to meet with Hand on
Aug. 26, posing as a “hitman,” according to Vance’s statement.
Hand instructed the agent to kill the witness, who hasn’t been
identified, Assistant District Attorney Peirce Moser said in
court today. The witness was a cooperating defendant.

Recorded conversations show Hand lied to his friends and
family to secure money to pay for the hit, prosecutors said.

Hand described in explicit detail how he wanted the murder
to take place, including using a car that would block the
driveway and a rear entry to the would-be victim’s home, Moser
said in court today.

Hand told the undercover investigator he wanted the witness
killed because the case “was filled with rats. Big time,”
according to court documents. “You don’t get a free pass in
life when you put away thirty (expletive) people,” Hand told
the undercover investigator.

Wife, Children

Hand also told the undercover investigator to kill the
witness’s wife and two young children and offered the house the
witness was living in as a reward, saying he owned it, according
to prosecutors.

Co-conspirators and accomplices in the case caused banks to
front millions of dollars to buy distressed residential
properties in and around New York City, according to
prosecutors. They then walked away with most of the cash,
leaving behind over-valued properties and worthless mortgage
papers.

AFG Financial and the individuals were charged with
corruption, grand larceny, fraud and conspiracy. The defendants
included Garden City, New York-based AFG Financial’s principals
and a number of employees, in addition to property locators,
appraisers, recruiters of straw buyers, bank employees and
lawyers.

Fraudulent Applications

AFG Financial had submitted fraudulent mortgage
applications to lenders such as Countrywide Financial Corp. and
New Century Mortgage Corp., according to a statement issued by
former district attorney Robert Morgenthau in July 2009.

The mortgages were securitized and sold into the secondary
market as collateralized debt obligations, Morgenthau said. CDOs
parcel fixed-income assets such as bonds or loans and slice them
into new securities of varying risk intended to provide higher
returns than other investments of the same rating.

The case is People v. Aaron Hand, 4870/2011, New York
Supreme Court (Manhattan).